Debating sweatshops

Nicholas Kristof, a columnist for the New York Times, recently wrote an article in support of sweatshops, citing what he sees as the relevant counterfactual:

...the vast garbage dump here in Phnom Penh. This is a Dante-like vision of hell. It’s a mountain of festering refuse, a half-hour hike across, emitting clouds of smoke from subterranean fires. The miasma of toxic stink leaves you gasping, breezes batter you with filth, and even the rats look forlorn. Then the smoke parts and you come across a child ambling barefoot, searching for old plastic cups that recyclers will buy for five cents a pound. Many families actually live in shacks on this smoking garbage...

Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children.

Kristof goes on to argue that we should be skeptical of labor standards in international trade agreements, as these can serve indirectly as barriers to trade, thus reducing demand for the products from factories in the developing world. But is he setting up a false choice between scavenging and sweatshops and between free trade and labor standards?

Perhaps labor standards sometimes serve as a competitive advantage in a globalized world of trade. As you might expect, Kristof's article garnered lots of letters to the editor, and I particularly liked the following from a professor at Rutgers Business School:

In fact, raising labor standards can give a competitive advantage to countries in the global market.

In the Cambodia example Mr. Kristof negatively cites, the Cambodian government, manufacturers and unions have actually urged that the program continue because they believe that it attracts foreign investment and helps create stable industrial relations.

The World Bank’s International Finance Corporation — hardly a bastion of radical labor activists or economic protectionists — is encouraging similar programs elsewhere because it believes that good labor standards and workers’ rights protections are good for business and good for overall development.

A final point: When I speak with workers around the world in garment and other export industries, they don’t tell me “Yankee, go home, we are just grateful to have work,” as Mr. Kristof would suggest they should. Instead, they invariably ask, “Can you do anything to help us make our jobs better?”

The question, then, is not how to exorcise labor standards from international trade agreements but how to include them in such a way as to improve labor productivity and not actually serve as an implicit trade barrier - a question to which, of course, there are no easy answers.